4 Step Guide to Rehab Properties for Maximum Profits

guide to rehab properties

Not sure how much time and effort to spend on rehabbing that property? Or even which parts of the house you should rehab?

You’re not alone.

That’s actually one of the top problems among my students. It’s challenging to understand that being a fix & flipper basically means they’re not only accountants, negotiators, real estate agents, salespeople, and marketers, but also interior designers and sometimes act as general contractors!

That’s a lot for anyone to take on – let alone a new investor.

Which is why I teach a simple rehab system to my students.

1. Don’t Over-Improve Your Property

Let’s say you’ve got this property under contract brimming with potential. You see so many places for improvement, and the numbers are favorable. Your calculations tell you that a $100k rehab gives you an after repair value (ARV) of $315k. Sweet!

Just one problem…

Nothing else in the neighborhood is selling for over $260k.

Time and time again, those I coach get sucked in by that $315k number… but the property never sells. Sure it’s nicer than the comps in the area, but if someone can move one street over, get basically the same property, and save $60k, that’s a no-brainer.

2. Don’t Under-Improve Your Property

In the same vein, you don’t want to go cheap on your rehab either. I see people spend $5k fixing the property and convince themselves that they’ve raised the value by $50k. People will notice that the house feels cheaper than any other in the neighborhood.

3. Build the Same as the Neighborhood

So, you’re not going to go all out, and you’re not going to under-spend… which means you’re walking a fine line!

But don’t worry, it’s nowhere near as tricky as you think.

The easiest rule of thumb is this:

Rehab your property until it’s basically the same quality as the others in the neighborhood. People who can afford nice homes don’t want to be surrounded by cheap properties, and conversely, nobody’s excited about having the cheapest home around.

If all the other homes have laminate counters, go for it. If vinyl flooring is the standard, install it! Yes, if it were your house you might want the granite countertops, but you’re trying to spend just enough to bring you a nice return. That’s how you do it.

4. Create One Showpiece

When it comes to investing, speed is the name of the game. If you’re making $25k per deal, the most money to be had is in offloading a property quick and moving to the next one.

If your property is exactly the same as all the others, it won’t stand out and you might get stuck with it for awhile (which can kill investors paying off a loan and a mortgage).

So here’s the one exception to rule #3:

Upgrade one feature above the neighborhood standard.

You could drop an extra $5k on the kitchen, expand the master bedroom, or creating a luxurious walk-in closet. Or, maybe it’s just granite countertops in the kitchen or finishing an inexpensive basement.

Just don’t do all of those! I’ve seen perfectionists lose sight of the goal and spend too much time and money getting a property up to their standards – when it should only be up to the neighborhood’s standards.

That’s the great rehab secret that has helped me fix & flip hundreds of homes for profit.

Ready for more step-by-step investment training? I’d love to teach you everything I know about fixing & flipping homes. Click the link below, and let’s see how I can best help you start your real estate empire.